Foundry Daily News

21. March 2007

Russia to Sign Energy and Metals

Deals in Africa. Following up latest breaking news on 19th of March - please decide for yourself what to believe

Russia hopes for a package of energy and metals deals with African states, a ministry statement said on Friday, March 16, as a government delegation left for South Africa, Angola and Namibia. Some Russian firms however deny having any such plans.

Russia seeks to regain the strong positions it enjoyed in Africa in Soviet times, when it splurged billions of dollars to support regimes calling themselves Marxist or friendly to Moscow.

But staging a foray of its private capital into the continent now, Moscow will have to compete with countries like China for a chunk of lucrative business opportunities.

Some analysts have said the stopover by Prime Minister Mikhail Fradkov in Angola is an attempt to renew the historical relationship between the two countries in the face of growing Chinese influence.

On Thursday, March 15, Fradkov took high-level government officials and business chiefs on a five-day tour of Angola, Namibia and South Africa, which follows last year’s visit by President Vladimir Putin. Putin pledged billions of dollars in investment during his trip. Fradkov’s delegation includes executives from aluminum firm RusAl, gas monopoly Gazprom, oil firms Lukoil and Rosneft and diamond miner Alrosa.Alrosa, which last year signed a pact with the world’s No. 1 diamond producer, South Africa’s De Beers, is likely to strike the largest number of deals, the Natural Resources Ministry said in a statement.

In South Africa, Alrosa will seek to boost cooperation in diamond exploration and clinch new deals to jointly explore for oil and gas and build new pipelines and power facilities.

In Angola, where it is already involved in a large diamond venture, Alrosa will seek agreements on a number of power generation projects.

The company will start exploring for crude oil in Angola, where it hopes to sign an agreement April 15, Alrosa president Sergei Vybornov said Friday. “It’s a petroleum project for oil exploration. It’s very promising in terms of the quality of the deposits,” he was quoted by Reuters as saying. “We’ll make an initial investment of around $50 million for exploration. If we need to, we will invest more. It’s hard to know exactly how much it will cost at this stage,” he added.

Apart from Alrosa, Rosneft and RusAl will also sign a number of high-profile deals, the ministry said, but the firms denied they had such immediate plans.

Confusion also clouded Russian metals companies’ plans.

The ministry said South Africa and RusAl were considering building a 750,000 ton per year smelter and a 1,300 megawatt power station.

“South Africa is one of the countries presenting potential interest to our business development, but today we have no concrete projects in that country,” a RusAl spokeswoman said. RusAl will soon become the world’s top producer of the metal after merging with smaller Russian rival SUAL and alumina assets of trader Glencore. SUAL, has said it is interested in taking part in the South African smelter project if it can secure sufficient energy resources.

An investment vehicle of SUAL’s owner Viktor Vekselberg, Renova, owns 49 percent of South Africa’s United Manganese of Kalahari.

It is involved in a project to build a pit with an annual capacity of 1.5 to 2 million tons of manganese ore and a ferro-manganese plant with the initial capacity of 250,000 tons of the metal.

But the ministry’s statement said the project “was facing problems with the energy supplies and railway communications between the mine and the plant.” A Renova spokesman denied the existence of problems in the project.

Eskom Holdings, South Africa’s state-owned power producer, is cooperating on the project to ensure electricity supplies, according to the statement. Spoornet, the national railway company, will transport ore to the smelter.